The Importance of Emotional Intelligence in Private Equity

A number of weeks ago an individual I ran into made the comment that the financial sector lacked emotional intelligence as it relates to marketing and capital procurement. I thought this was an extremely astute comment.

When you’re deeply entrenched in the private equity space, it’s tempting to glorify performance and think it’s the only thing that matters. I find this rather odd, as by the pure nature of things, most groups are not the top performers. Sure, a solid track record, IRR and pedigree are necessary, but if performance were all that mattered, most private equity groups wouldn’t get any money.

This is why I believe emotional intelligence is important. In their quest for capital, private equity companies need to be more aware of what is really going on in the minds of investors and design their marketing accordingly. Consider how crucial relationships are within the industry; a process that is dramatically influenced by relationships is anything but objective.

Marketing within the private equity sector should take into account how people actually process information and make decisions. Investing has always been and will always be driven by emotions – even by the sophisticated investors representing large institutions. If your materials are engaging, compelling and interesting, don’t you think you’ll get in the door more often? Is a thirty seven-page power point deck any of these things? In most cases, I would argue not.